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“U.S. PIRG applauds CFPB’s enforcement action, including over $15 million in total penalties, against four mortgage insurers to end the practice of giving kickbacks to mortgage companies to get their business. Illegal kickbacks result in homeowners paying more for their loans, and as the CFPB itself says, they “distort” markets. The practice is harmful to those homeowners with small down payments and little equity because they are required to obtain mortgage insurance and are forced to pay extra because illegal kickbacks drive up the cost.

“One way to make enforcement actions against these and future defendants more effective would be for the CFPB to explicitly forbid defendants from deducting enforcement penalties from their taxes. Otherwise, the firms are allowed to write off these penalties as a business expense and reduce the impact of their penalities by up to thirty-five percent. Taxpayers, not shareholders, end up absorbing those tax deductions, as U.S PIRG explained in our recent report, Subsidizing Bad Behavior. When big companies break the law, they shouldn’t be allowed to dodge part of the penalty. The settlement costs should come directly out of their profits, not the pockets of everyday taxpayers.

“Nevertheless, this action against corporate wrongdoing is further proof that establishing the Consumer Financial Protection Bureau was a good idea. The CFPB is protecting consumers and making markets work better. Unfortunately, a minority of U.S. Senators continue to inject uncertainty into our economy by blocking the confirmation of CFPB director Richard Cordray to a full term unless the agency’s authority is first gutted. That position serves Wall Street, not the public interest.”

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U.S. PIRG, the U.S. Public Interest Research Group, is a federation of non-profit, non-partisan public interest advocacy organization that takes on powerful interests on behalf of its members, working to win concrete results for our health and well-being.